Almost all start-ups’ biggest fear is whether their business will be profitable and scalable and how long will it take reach success. But, with a credit repair business, be rest assured, you will definitely be running a growing company. Finance is a major part of the business and invariably everyone will have some kind of credit on their business or personal lives. Credit repair is the process of correcting errors and inaccurate information or fixing poor credit standings in consumers’ credit report to boost their credit scores.
Running a credit repair business from home is a perfect way to do something for the community and at the same time, earn a living. It has unlimited growth potential if you give full efforts and time to this business.
How do Credit Repair Companies Work
Many people out there have poor credit, which makes them unqualified to rent an apartment, get a personal loan, buy a car, or even apply for a credit card. Here come credit repair companies that typically offer to review credit reports and rectify any negative score with the credit bureaus on the individual’s behalf. Credit repair companies are different from credit counseling companies, which are generally financial educational organizations that review your finances and statements with the aim to teach you how to manage money.
Credit repair companies generally start the process by requesting the applicant to submit his or her credit statement from consumer credit bureaus of the respective country. Derogatory marks from the credit reports are reviewed, including bankruptcies, tax liens, and charge-offs. Once this is done, the company starts working on disputing the errors and negotiating with the credit bureaus to remove those negative scores from the report. Applying for validating the information, cease and detest letters to debt collections on consumer behalf, and letters to dispute erroneous negative marks are few tactics that credit repair companies use to improve customer credit scores.
The investigation and verification usually take 30 working days and the results of the investigation are communicated within 5 days of completion of the investigation.
Benefits of Running a Credit Repair Business
It is a highly profitable business as it is a recurring revenue business. You can easily scale the business with credit repair software. The software application processes errors faster and accurately. Since credit is the main element of a good financial climate, you will not have to be dependent on the economy to run the business. You will be greatly helping the community to improve their financial health. You can start this business from home and cut back on office rental and overhead costs. You can grow this business easily through referrals and affiliate partnerships.
Steps to Start a Credit Repair Business
Step 1: Get Training to Understand The Credit Repair Process
Finance is a critical subject and unlike management, it has technicalities and processes to be remembered. Credit repair is no different. You have to learn important information related to the subject, including understanding FICO score range, removing false items legally to increase credit score, how to work with companies who have bankruptcy and other issues, and how a successful credit repair company works. Did you know, if you want to be successful in this venture, you should not dispute more than 2 – 3 items per month?
You also have to learn the advanced tactics, such as how to read a credit report, what to dispute on credit report, timing letters for maximum effectiveness, when to pursue a legal claim on behalf of clients, investigation rules and procedures, what is meant by round 1 and round 2 letters, and the various negotiation strategies with the credit bureaus.
You need to undergo a credit repair training course to arm yourself with the above subject information. Certification will also give the needed confidence in customers on you.
Most credit repair certification courses are provided online, and the programs usually run for a month or so.
Step 2: Create a Solid Business Plan
Whether this is going to be a side business or a full-on business venture, you will need to take a big picture when developing your business plan for your credit repair company. The plan will act like a roadmap that you can follow and execute your goals with ease and perfectness. You need to pinpoint your goals in different segments of the business, including marketing, finance, operations, profits, and business management. You will also have to define your business mission and vision.
The plan will also outline the market condition, competitors and target market. This will help you to plan your potential customers and the services you will offer. As your business grows and evolve, your business plan will change. The essential components of a great business plan include:
- Executive Summary: Introduction to the business plan, highlights, mission statement.
- Business Overview: Snapshot of the market for credit repair business; the problems and your solutions; your services.
- Market Research and Analysis Report: Analysis of target market with figures and statistics.
- Competition Analysis: Identify the weaknesses or gaps in services provided by competitors and how you will address them with your services.
- Goals: Marketing, financial and business development goals.Future expansion in terms of services addition etc.
- Financial Strategies: Expenses and operational funds that will incur and how you plan to use the funds in your business and make a breakeven.
- Operations and Management: Organizational structure of the business and the managerial heads.
Step 3: Incorporate Your Business
Your next step should be incorporating the business to run it legally. To know more about registering a business legally, hire a lawyer and ask him to make you understand the licenses to be obtained, various tax obligations, permits and other requirements to be fulfilled.
You can incorporate your business as a sole-proprietorship, a limited liability company, a partnership or a corporation. Since this is a home-based business, a limited liability company should suit you. Look up the web or contact your state or federal administrative office to find out the requirement of the license. You may also have to get an EIN from your state’s IRS to file tax and buy limited liability insurance to protect your company and your personal assets from legal fights.
Once everything else is set, open a bank account under your company name for official transactions. Do not use your personal account for your business transactions or else it will be difficult for you to generate a financial statement during financial year auditing. You may also want to have a separate mailing address or a mailbox and a phone connection for your company if you are running it from your home.
Step 4: Install a State-of-the-art Credit Repair Software
Although running a credit repair business without software is possible, a software application will benefit the business in several ways. It will streamline the entire process and give you more time for doing other important work, such as negotiation and following-up.
If you are starting out your business from home, you should definitely consider starting with a proven model. A new-age software application should give you more benefits in this digitally evolving world. You will be able to manage events and contacts easily, your lead capturing process will be streamlined, you shall also be able to organize clients and track progress on each credit inquiry more effectively with the help of a software program.
A good software application will help you in your marketing and advertising processes, such as export contacts for email campaigns and client newsletters.
Step 5: Set up The Processes
You need a payment platform and an agreement readied, apart from the credit repair software, to ensure that everything is set for your business. A client agreement will protect your business and your personal liabilities from serious pitfalls. It will also help you secure a solid client relationship. Make sure you mention everything clearly on the agreement. If the client has suggestions, try to incorporate them in your contract.
Furthermore, learn how to avoid credit repair processing pitfalls. Credit repair business is not a fixed cost solution. It rather works on a retention basis. So, you will need to keep your clients engaged and provide them with tools and solutions to fix their credit. Some of the ways you can continue getting payments from old and new clients include:
- Provide affordable services to clients so that they stay subscribed to you for a long time
- Consider different price points based on different clients’ income level
- Automate the payment software so that you need not have to chase down the clients for monthly payment. For instance, you could use recurring billing via credit card
- Use a merchant gateway platform account that allows charges for credit repair services and fee. A gateway will help you authorize the payments properly. Note that most common payment gateways do not allow charges for credit repair. So cross check before opening an account
- If you want to be a successful credit repair firm, instead of charging an upfront one-time fee for starting the service, charge a ‘first work’ fee after completing the first round of letters
- By offering a money back guarantee or refunds, you will be able to bring far more clients as it will give them some kind of assurance.
- Educate and empower your clients through expert guidance, providing educational materials, and staying connected with clients via all mediums. For instance, you can send weekly tips and advice via text messages or email that they can use immediately.
Step 6: Market and Advertise Your Business
Your first step should be launching a website that attracts and converts visitors to clients. Make sure you do the needful, such as use SEO, PPC and other website optimizing strategies, to bring in more traffic. Some of the tips you could use to attract clients are:
- Use pop-up offers ads and place them strategically throughout the site
- Offer gated content in exchange for an email
- Offer free consultation. This will increase the chances of follow-ups and boost the client’s level of investment
Apart from the business website, use as many ways as possible to get more clients:
- Set up a professional voicemail and establish credibility from the first contact.
- Use a professional email address that has your domain name. Use ‘firstname.lastname@example.org’ instead of ‘@gmail.com’.
- Make your email address secure and legitimate and ensure your clients know this.
- Use a dedicated business phone number and mailing address.
- If you have the provision and human resource, consider applying for a toll-free number. Toll-free numbers are easier to memorize and are a great marketing tool to make clients interested.
- Make use of credit repair business software’s communication tools.
- Distribute fliers and consider cold calling.
We have covered the essentials for starting a credit repair business from home. You may also want to hire and train staffs once your business starts to grow. You will need staffs for answering calls, emailing, and an assistant to manage everything. So work towards the thought.
7 Tips from Successful Business Owners
If you have come this far, you would probably like to know what the veterans have to say:
- Understand the cycle of credit repair in the context of financial services. Make contacts with local real estate agents, tax preparers, auto dealers and other brokers. They usually have clients with credit repair needs.
- Educate your affiliate partners about your services and their features so that they can refer you more clients.
- Short-list your clients to one or two primary niches.
- Educate your clients by starting a blog with weekly and monthly posts on credit habits, the success of credit repairs, what clients should do and should not.
- Make your clients your brand advocates by asking them to leave a testimonial, rating, or review on your website.
- Delegate tasks to staffs. When things start getting bigger and bigger, hire a virtual or office assistant for completing non-important tasks.
- Learn and explore. Join different forums, attend meeting and webinars, and subscribe to podcasts, blogs, and eBooks on credit repair to boost your knowledge.
If you have any doubts or clarifications regarding credit repair services, please send your queries in comments below.